Government, Esso sign oil prospecting deal
The Government of Guyana has signed a petroleum agreement with Esso Exploration and Production Guyana Ltd (Esso), a company based in the United States and incorporated in the Bahamas. According to a press release from the Guyana Geology and Mines Commission (GGMC) the agreement is based on a proposal to the GGMC for a production-sharing agreement in respect of petroleum exploration acreage in Guyana's offshore. Signing on behalf of the Guyana Government was President Janet Jagan and on behalf of Esso was President of Esso and Vice-President of Exxon Exploration Company, John Willot. The release stated that the proposal, which was submitted to the GGMC was accepted and through negotiations a contract was finalised. The contract is based on the provisions of the mining policy that the government adopted in January 1997 and which provided for compliance with the provisions of the Petroleum Act and Environmental Protection Act of Guyana. According to the release the area licensed is approximately 60,000 square kilometres commencing from about 120 km from the coastline. Available data from adjacent areas nearshore were studied but only pioneering work would reveal whether there are favourable prospects for commercial reserves of natural petroleum and/or gas. The release further stated that the licence is for an initial period of four years and is renewable at the option of the company, subject to the terms of the agreement, for a number of years not exceeding three years in each case, for the maximum of two renewable periods as allowed for by the Petroleum Act. This agreement is similar to other current agreements. The release stated that during the initial period of the agreement, Esso has committed to conduct geophysical surveys and embark on technical studies using a variety of remote sensing methods. Eventually, if satisfactory prospects can be identified, drilling commitments are expected to follow. According to the statement, Guyana stands to benefit enormously in the event of a developed commercial discovery. In such a case, Guyana will be entitled to 50 per cent of any profits generated from petroleum production. This is in addition to rentals, fees and charges that total approximately US$150,000 annually at the minimum, with formulated effective increases as the exploration phase matures and if the production phase comes into account. This is the first petroleum prospecting licence awarded for 1999. 
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